CARGILL TOUCHES THE WORLD OF BUSINESS Creating supply chains and shipping products to over 6,000 ports worldwide Helping farmers optimize yields, store crops and access the best markets Formulating better-tasting recipes for restaurants and packaged foods Creating food ingredients that promote health Managing risk and pricing for farmers and corporate customers
CARGILL AND STANFORD A growing relationship that began 25 years ago Cargill builds alliances with designated universities that have the best students, faculties and ideas In 2008 Cargill helped fund Stanford s program on Food Security and the Environment Our grant helps fund program management, supports teaching and research, and sustains an annual visiting fellows program
Olaf Hammelburg Olaf Hammelburg CARGILL AND THE GATES FOUNDATION
CARGILL WORKS WITH ALL HOLDERS
1 BILLION UNDERNOURISHED
WHERE ARE THE WORLD S HUNGRY? PERCENT OF POPULATION UNDERNOURISHED
INDIA 327.7 MILLION UNDERNOURISHED SURPLUS OF CORN, SOYA CHINA 130.4 MILLION UNDERNOURISHED $2.5 TRILLION CASH RESERVE
CAN WE FEED THE WORLD? YES.
~1 billion x 200 kcals = 30 Million Tons Malnourished people Average daily calorie deficit Whole grain 1/6 the amount of grain we convert to fuel
CALORIC FAMINE ECONOMIC FAMINE
CALORIC SUFFICIENCY SUSTAINABLE RURAL SOCIOLOGY
GHANA BREADBASKET APPROACH Concentrate resources in regions with high agricultural promise Organize smallholders; aggregate production on large-scale farms Double farmer incomes
MAIZE SURVIVAL PRICE FOR SMALLHOLDER (assumes 25-50% input intensity of US farmer to achieve 4.5 mt/ha yield) maize px/mt for 1 hectare, 4-person household to clear 50% of national avg income 1400 1200 1000 800 600 $575/mt = $14.50/bu 400 200 0 25-yr avg US px=$107/mt 10 th percentile SS Africa Avg 90 th percentile 0 500 1000 1500 2000 2500 3000 national average per capita income
AGRICULTURE: STATE OF DISEQUILIBRIUM Small local production decline Large global price increase
GLOBAL FOOD PRODUCTION VS. PRICE (production of grain, rice, major oilseeds, PO, FSHM vs. corn/soybean/wheat futures price index) 70 60 percentage change in price 50 40 percentage change in production 30 20 10 0-10 -20-30 1975 1980 1985 1990 1995 2000 2005 2010
WORLD GRAIN STOCK AND STOCKS:USE mmt stocks 500 450 400 350 300 250 200 150 mmt stocks S:U% S:U% 45 40 35 30 25 20 15 10 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
COMPLACENCY CRISIS
COMMODITIES VOLATILITY / FOOD PRICES In the mix: Increasing global consumption Increasing demand for crops for biofuels Export restrictions Unpredictable weather Changing appetites/ Demand for protein Rising fuel prices
THE POWER OF PRICE
COMPARATIVE ADVANTAGE The world will always raise the most food the most economically if every farmer plants the right crop for the soil and climate, and then trades with others. DAVID RICARDO
RURAL PROPERTY RIGHTS Smallholder must have the ability to own the land, have access to it and transfer it to future generations Encourages investment in agriculture and provides a more stable system of government Property used as collateral
INCREASED REVENUE CERTAINTY Smallholders need a reliable market into which to sell their crop Today, they lack the revenue certainty to provide sufficiently and continuously Obstacles include: forced to sell at harvest; lack of storage; insufficient capital Selling below cost of production discourages further production
SOLOMONIC PRICE
OPEN MARKETS Open markets create food security Governments need to support trade Short-term trade restrictions are harmful and increase volatility Trade leads to a more nourished world
THE KEYS TO INCREASING FOOD SECURITY Understand the tradeoffs between caloric sufficiency and rural sociology Honor comparative advantage Clarify property rights Provide smallholders in developing countries revenue certainty Enable open markets Private and public sectors working together